On Friday, two of the largest tire suppliers in the U.S. announced the joining of forces, eschewing future competition with each other. Arizona-based Discount Tire is in the process of acquiring Indiana-based Tire Rack, and the transaction is expected to close on December 31. With unpredictable rubber supply challenges and price increases in play, this could mean a stronger base for the two suppliers.
Both family-run brands, Discount Tire and Tire Rack have similar histories. Bruce T. Halle rented an old plumbing supply building in Ann Arbor, Michigan with an inventory of six tires, running the whole place himself. Store by store, Halle grew the business, and now 1,100 Discount Tire stores are open across 37 states in the U.S. Meanwhile, Tire Rack was founded in Indiana in 1979 by Dutch immigrant Peter Veldman. Today, Tire Rack runs 2.7 million square feet of distribution center space.
If tire prices increase at Discount Tire or Tire Rack, it’s much more likely to be a result of the threat of a rubber shortage than the acquisition. The new combined management team believes it can make a bigger impact as a team than as competitors. And I truly hope the new team doesn’t axe Tire Rack’s Street Survival program, which teaches teens how to be better drivers.
“This [acquisition] accelerates our omnichannel strategy, provides a broader distribution network and a platform to enhance our B2B and fleet capabilities,” said Dean Muglia, CEO at Discount Tire. “Quite simply, we are better together.”
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